Health insurance startups Oscar, Bright Health bet on profits in the ACA marketplace

More than a dozen health insurers are shrugging off political uncertainty and the Trump administration's recent suspension of the ACA's risk adjustment payments to enter the individual marketplace, according to Bloomberg.

Leaders of the surge are health insurance startups Bright Health and Oscar Health. Bright Health, led by former UnitedHealthcare CEO Bob Sheehy, revealed July 11 it will offer ACA marketplace products in five more cities in 2019. It currently operates on the marketplace in two markets.

"Early on, there was the wrong model and the wrong pricing level," Mr. Sheehy told Bloomberg. "Now the market's stabilized, so we think it's a terrific opportunity."

The move mirrors the strategy of Oscar, which filed plans to offer individual marketplace coverage in six new markets in 2019. Oscar's total presence will span nine states and 14 markets next year, the company said June 21.

Another similarity between the startups' game plans: tight-knit relationships with hospitals. Narrow networks are a feature of the health insurers' strategy to control costs and medical spending.

The increased participation in the ACA's 2019 individual marketplace is in stark contrast to 2017 and 2018. During those years, insurers fled some markets and hiked premiums to offset rising losses.

"For the insurers that did stick around in the individual market, 2018 is shaping up to be a very profitable year," Cynthia Cox, director of the Program for the Study of Health Reform and Private Insurance at the Kaiser Family Foundation, told Bloomberg. "They've managed to raise premiums enough to cover their costs, and then some."

More article on payers:
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BCBS Association: 2019 premium hikes on the way without risk adjustment payments

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